Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • June 2018
06

Solvency II deterring long-term investments

Open-access content Tuesday 26th June 2018 — updated 5.50pm, Wednesday 29th April 2020

Almost half of European insurers think Solvency II has restricted their ability to make long-term investments, with many worried the regulation has negatively impacted their products.

2


That is according to a survey of 87 insurers across 17 EU markets, which finds that 48% have invested less in equities, long-term bonds and private placements because of Solvency II.

The findings also show that 58% of those providing long-term savings products with guarantees believe the regulation has been damaging to their offerings.

This has led to fears that insurers are coming under pressure to shift risk on to customers at a time when the EU has been looking to boost sustainable growth around Europe.

"The European Commission's 2020 review of Solvency II must address the regulation's overly conservative nature," said Andreas Brandstetter, president of Insurance Europe, which carried out the research.

"It treats insurers as if they were short-term traders when they are, in fact, mostly long-term investors."

Despite concerns about investments and products, it was found that three-quarters of insurers believe the regulation has improved risk management and governance practices.

Brandstetter said the industry supports Solvency II, and welcomed changes that regonise infrastructure as a separate asset class and remove barriers to standardised transparent securitisations.

However, he said the Solvency II risk margin should be reduced, and that it currently removes €200bn (£176bn) of capital from balance sheets that could instead be put to productive use.

He also called for a reduction in the calibration of long-term equity investments, which are currently based on trading risk and create a barrier to greater investment.

This comes after research by Willis Towers Watson (WLTW) found that the risk margin had become an increasingly material component of insurers' balance sheets.

The firm said this was encouraging insurers to offload risk using companies outside the EU, causing asset liability matching challenges, and growth in the longevity reinsurance market.

"We believe the high level of risk margin is resulting in higher premium rates and reduced competition, leading to worse value for consumers," WLTW director, Kamran Foroughi, commented.


Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession

This article appeared in our June 2018 issue of The Actuary .
Click here to view this issue

You may also be interested in...

2

MPs back social care tax for over-40s

Adults aged 40 and over should pay a new tax to help fund the “unsustainable” costs of social care in the UK, two House of Commons select committees have said today.
Wednesday 27th June 2018
Open-access content
2

FTSE 350 firms look set to miss 2020 targets for women on boards

FTSE 350 companies will need to give around 40% of all new leadership roles to women over the next two years if they are to meet targets for female representation on boards by 2020.
Wednesday 27th June 2018
Open-access content
2

Just one-quarter of trustees confident in consolidating DB pension schemes

Only a quarter of defined benefit (DB) pension scheme trustees in the UK would feel comfortable deciding whether consolidation into a ‘super fund’ makes sense or not.
Thursday 28th June 2018
Open-access content
2

Motor insurer's profits hit a more than two-decade high

Rising premiums and falling injury claims saw the UK’s motor insurance market record higher underwriting profits last year than at any point since 1994.
Friday 29th June 2018
Open-access content
2

Trade credit insurance claims hit nine-year high

There were more insurance claims made across England and Wales to cover the non-payment of debts in the first quarter of this year than at any time since 2009.
Friday 22nd June 2018
Open-access content
2

Older workers most at risk to automation

Almost a quarter of the jobs held by workers aged 55 and over in the UK could be displaced by automation technology over the next decade, new research has found.
Friday 22nd June 2018
Open-access content

Latest from June 2018

2

Vast majority of company board members want more cyber security spending

The overwhelming majority of company board members across the world believe their firms should spend more money on cyber security, new research has found.
Monday 25th June 2018
Open-access content
2

Data identified as saving opportunity as workforce health costs rocket

Harnessing the power of data analytics could help insurers make significant cuts to the rising cost of workforce healthcare benefit programmes around the world.
Thursday 21st June 2018
Open-access content
2

Majority of global insurers to rely on acquisitions for growth

Eight in ten insurance executives across the world will look to acquisitions and partnerships in search of growth over the next three years, a new survey has found.
Thursday 21st June 2018
Open-access content

Latest from small_opening_image

2

COVID-19 forum for actuaries launched

A forum for actuaries has been launched to help the profession come together and learn how best to respond to the deadly coronavirus sweeping the world.
Wednesday 25th March 2020
Open-access content
2

Travel insurers expect record payouts this year

UK travel insurers expect to pay a record £275m to customers this year as coronavirus grounds flights across the world, the Association of British Insurers (ABI) has revealed.
Wednesday 25th March 2020
Open-access content
2

Grim economic forecasts made as countries lockdown

A sharp recession is imminent in the vast majority of developed and emerging economies as the deadly coronavirus forces businesses to shut down across the world.
Tuesday 24th March 2020
Open-access content

Latest from inline_local_link

2

COVID-19 forum for actuaries launched

A forum for actuaries has been launched to help the profession come together and learn how best to respond to the deadly coronavirus sweeping the world.
Wednesday 25th March 2020
Open-access content
2

Travel insurers expect record payouts this year

UK travel insurers expect to pay a record £275m to customers this year as coronavirus grounds flights across the world, the Association of British Insurers (ABI) has revealed.
Wednesday 25th March 2020
Open-access content
2

Grim economic forecasts made as countries lockdown

A sharp recession is imminent in the vast majority of developed and emerging economies as the deadly coronavirus forces businesses to shut down across the world.
Tuesday 24th March 2020
Open-access content

Latest from 06

2

Vast majority of company board members want more cyber security spending

The overwhelming majority of company board members across the world believe their firms should spend more money on cyber security, new research has found.
Monday 25th June 2018
Open-access content
2

Data identified as saving opportunity as workforce health costs rocket

Harnessing the power of data analytics could help insurers make significant cuts to the rising cost of workforce healthcare benefit programmes around the world.
Thursday 21st June 2018
Open-access content
2

Majority of global insurers to rely on acquisitions for growth

Eight in ten insurance executives across the world will look to acquisitions and partnerships in search of growth over the next three years, a new survey has found.
Thursday 21st June 2018
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Manager - Building new team!

London (Central)
Up to £130k + Bonus
Reference
148845

Shape the Future of Credit Risk Model Development

Flexible / hybrid with 2 days p/w office-based
£ six figure salary with excellent bonus potential + package
Reference
148843

Longevity Director

Flexible / hybrid with 2 days p/w office-based
£ six figure salary with excellent bonus potential + package
Reference
148842
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ